NZ dollar hits 3-week low vs. euro as ECB's Draghi signals end to rate cuts

Friday 11th March 2016

The New Zealand dollar hit a three-week low against the euro in volatile trading after European Central Bank president Mario Draghi signalled he won't cut interest rates further.

The kiwi touched 59.31 euro cents, and was trading at 59.59 cents at 8am in Wellington, from 60.43 cents yesterday. The local currency advanced to 66.76 US cents from 66.32 cents.

The European common currency initially rose after the ECB detailed a series of measures to stimulate the region, cutting three key interest rates and increasing its bond-buying programme. However the euro then sank sharply after Draghi warned at a press conference following the announcement that the bank doesn’t anticipate it will be necessary to reduce rates further.

"The euro led many currencies on a merry dance overnight," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. The euro "initially fell as the bank delivered its expected rate cut, but rallied back strongly as President Draghi suggested that no further cuts might be delivered."

In New Zealand today, the BNZ-BusinessNZ Performance of Manufacturing Index for February is published at 10:30am, food price data for the month are published by Statistics NZ at 10:45am, and the Real Estate Institute's monthly house sales data may also be released.

Traders will also be eyeing Chinese industrial production, retail sales and fixed asset data for February which is due out today.

The New Zealand dollar gained to 89.65 Australian cents from 88.66 cents yesterday, advanced to 4.3441 yuan from 4.3211 yuan, slipped to 75.36 yen from 75.43 yen, and was unchanged at 46.71 British pence. The trade-weighted index rose to 71.55 from 71.27.

BusinessDesk.co.nz

Comments from our readers

No comments yet